If you’re interested in getting a little exposure to the small side of the Australian share market, then you might want to take a look at the shares listed below.

I believe these four ASX small cap shares have very bright futures ahead of them. Here’s why:

ELMO Software Ltd (ASX: ELO)

The first small cap ASX share to watch is ELMO Software. It is a cloud-based human resources and payroll software company which provides users with a unified platform. This platform streamlines processes such as recruitment, on-boarding, learning, and payroll. It has an estimated $2.4 billion market opportunity in the ANZ market and the potential to expand globally in the future. It appears to have its eyes on a UK market worth ~$6.8 billion.

MNF Group Ltd (ASX: MNF)

Another small cap ASX share to watch is MNF Group. It is a leading provider of Voice over Internet Protocol (VoIP) technology. This technology is used to convert analogue audio signals into digital data that can be sent over the internet. This is essentially using a telephone via the internet. Demand for VoIP services has been growing very strongly this year because of the pandemic and the work from home initiative. I expect this trend to continue in FY 2021.

Nitro Software Ltd (ASX: NTO)

I think Nitro Software is a small cap ASX share to watch. Nitro is a software company that is aiming to drive digital transformation across multiple industries. Its core solution is the Nitro Productivity Suite. This provides integrated PDF productivity and electronic signature tools to customers through a horizontal, software-as-a-service, and desktop-based software solution.

Volpara Health Technologies Ltd (ASX: VHT)

A final small cap ASX share to watch is Volpara. Its software uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. It has been a very strong performer over the last few years thanks to the growing popularity of its software with radiologists across North America. I expect this positive form to continue this year, especially with the help of recent acquisitions, which look set to increase its average revenue per user metric materially in the future.

More reading

• 5 exciting small cap ASX shares to watch
• Why these ASX tech shares should be on your radar
• Why you should watch these exciting small cap ASX healthcare shares closely
• 10 more top broker ASX share picks for FY21
• 2 exciting small cap ASX shares that could be destined for big futures

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended Elmo Software, Nitro Software Limited, and VOLPARA FPO NZ. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is fighting hard to get into positive territory but has just fallen short. At the time of writing the benchmark index is down 3 points to 5,952.5 points.

Four shares that are not letting that hold them back are listed below. Here’s why these ASX shares are storming higher:

The Kogan.com Ltd (ASX: KGN) share price is up 4% to $17.57. Investors have continued to buy the ecommerce company’s shares on the belief that the pandemic is accelerating the shift to online shopping. In addition to this, Kogan has just completed a $120 million capital raising. These funds will be used to make value accretive acquisitions.

The Netwealth Group Ltd (ASX: NWL) share price has risen 4% to $10.56. Investors have been buying the investment platform provider’s shares following the release of its quarterly update this week. At the end of the fourth quarter, Netwealth’s funds under administration (FUA) stood at $31.5 billion. This means the company grew its FUA by $8.2 billion or 35% during the financial year. This is despite a negative market movement of $0.9 billion for the year.

The Silver Lake Resources Limited (ASX: SLR) share price is up almost 6% to $2.39. The catalyst for this was the release of a positive update on its exploration activities at Deflector. According to the release, Deflector’s mineral resource has increased 54% to 1.27 million ounces and its ore reserves have lifted 30% to 447,000 ounces.

The Zip Co Ltd (ASX: Z1P) share price has rocketed almost 14% to $7.63. This is despite there being no news out of the buy now pay later provider. However, there’s a lot of excitement in the industry right now following reports of strong customer and sales growth. This appears to have led to a lot of investors piling into shares like Zip Co this week.

More reading

• Silver Lake share price up 6% on resource upgrade
• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• A surprise ASX share that’s doubled since March
• These ASX fintech shares are tackling COVID-19 head on
• Zip share price surges 30% in a week. Are we calling bubble yet?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and ZIPCOLTD FPO. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Kogan, Netwealth, Silver Lake, & Zip Co shares are storming higher appeared first on Motley Fool Australia.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week in a subdued fashion. The benchmark index is currently down 0.2% to 5,945.6 points.

Here’s what is happening on the market today:

Bank shares weigh on ASX 200.

Three of the big four banks have been acting as a drag on the ASX 200 index on Friday. Only the Commonwealth Bank of Australia (ASX: CBA) share price is in positive territory at lunch with a decent 0.5% gain. The rest of the big banks are down by at least 0.5%, with Australia and New Zealand Banking GrpLtd (ASX: ANZ) the worst performer with its 0.7% decline.

Tech shares rise.

One area of the market which is on form on Friday is the tech sector. At the time of writing the S&P/ASX 200 Information Technology index is up a sizeable 1.8% thanks to solid gains by the likes of Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO). This follows a strong night of trade on Wall Street’s Nasdaq index. The technology-focused index rose to a new record high.

Treasury Wine downgraded.

The Treasury Wine Estates Ltd (ASX: TWE) share price is sinking lower on Friday after being downgraded by analysts at Ord Minnett. They have downgraded the wine company’s shares to a lighten rating with a reduced price target of $10.00. This follows the release of its FY 2020 earnings guidance earlier this week. That guidance fell well short of Ord Minnett’s expectations.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Friday has been the Silver Lake Resources Limited (ASX: SLR) share price with a gain of almost 6%. This follows the release of a positive update on its exploration activities at Deflector. The worst performer has been the Chorus Ltd (ASX: CNU) share price after the release of a disappointing fourth quarter update by the New Zealand based telco.

More reading

• Fund managers have been buying Costa and this ASX 200 share
• Brokers name 3 ASX 200 shares to buy today
• Silver Lake share price up 6% on resource upgrade
• Why Kogan, Netwealth, Silver Lake, & Zip Co shares are storming higher
• The hidden risk to early superannuation withdrawal that no one told you about

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A surprising ASX share success story over the last few months has been Australian consumer products company McPherson’s Ltd (ASX: MCP). Since plummeting to a low of $1.44 in March, shares in the health, wellness and beauty specialist have more than doubled in price and are now trading back up at $3.01. This means that, despite all the market upheaval caused by the coronavirus pandemic this year, McPherson’s shares have gained over 22% year to date.

What is McPherson’s?

Originally founded in 1860, McPherson’s is now a leading Australasian health and beauty company. It owns six core brands consisting of Dr. LeWinn’s, A’kin, Swisspers, Manicare, Lady Jayne and Multix. The company sells its products across Australia and throughout parts of Asia, including China.

McPherson’s has been quick to respond to the unique consumer demands created by the COVID-19 pandemic. It invested heavily in the research and development of sanitation and immunity and, in April, launched a new hand sanitiser in partnership with Chemist Warehouse licensed brand ‘Ozguard’.

The company also invested in expanding its online stores after noting a big uptick in sales through these channels in the wake of lockdown restrictions.

In a trading update released to the market back in April, McPherson’s stated that it was still on track to meet its FY20 underlying profit guidance of 10% annual growth. Its supply chains into China had not been severely disrupted, and the company was benefitting locally from consumers’ increased focus on personal hygiene. Its Multix line of household products including freezer bags and baking aids was also seeing an uptick in sales as people spent more time cooking at home.

And while McPherson’s did note that significant uncertainty still existed in the market, it emphasised that it had a strong enough balance sheet to meet any short-term challenges. Net debt was low at $14.7 million, and the company was in the final stages of negotiating an additional 3-year $47.5 million debt facility.

Should you invest in this ASX share?

This company’s messaging has clearly resonated with investors. By boosting its online presence and directing its R&D investment towards personal hygiene and sanitation products, McPherson’s has shown it can quickly pivot to capitalise on growth opportunities in a crisis.

McPherson’s focus on its digital sales channels may help it to follow in the footsteps of other ASX companies who have (so far, at least) successfully negotiated the COVID-19 crisis. Online homewares and furniture company Temple & Webster Group Ltd (ASX: TPW) has seen its shares price skyrocket almost 190% higher so far this year. Meanwhile shares in e-commerce market darling Kogan.com Ltd (ASX: KGN) have also more than doubled in price year to date. These companies both sell direct to their consumers, have a strong digital presence and low fixed costs. In the current climate, they are quickly surging ahead of many of their traditional brick-and-mortar retail counterparts. 

It’s worth keeping in mind that McPherson’s is now trading within eyeshot of its 52-week high. This means it could be creeping into overvalued territory, especially as the country prepares for a potentially bruising recession. However, the COVID-19 pandemic could bring about a radical – and potentially permanent – step-change in the consumer retail industry. This makes it the perfect time for McPherson’s to continue expanding its online presence to increase its future growth prospects.

More reading

• Why Kogan, Netwealth, Silver Lake, & Zip Co shares are storming higher
• Why the Kogan share price soared 38% in June
• Kogan share price hits record high after upsizing share purchase plan
• Why Coles, Kogan, Northern Star, & Splitit are charging higher
• Why Lovisa, New Hope, Temple & Webster, & Whitehaven Coal are tumbling lower

Rhys Brock owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Australians are rushing to access their superannuation early amid the COVID-19 pandemic but there’s a key risk of doing this that few would be aware of.

The latest data showed that 2.4 million Aussies have applied to withdraw $25 billion from their nest egg, reported the Australian Broadcasting Corporation.

But before you join the frenzy, you should be aware that this could impact on your ability to get a new home loan or refinance an existing mortgage.

Banks’ dim view

I was told by a mortgage broker contact that lenders are likely to reject applications from those that have tapped into this support scheme as they are deemed to be under financial hardship.

That’s fair enough because you need to declare that you are facing financial stress in the first place before you can get approved by the tax office.

From what I understand, Commonwealth Bank of Australia (ASX: CBA) is the strictest and it’s rejecting just about anyone that have tapped into their super.

The other lenders like Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) are heavily scrutinising such applicants.

Feeding the housing downturn

You would think that those forced to gain early access to super won’t be apply for housing loans, but this isn’t the case. The mortgage broker I chatted with said many of their clients (usually first home buyers) have done this and were shocked to find they can’t get a loan now.

This coincides with the latest ABS data that showed new loan commitments plunged a seasonally-adjusted 11.6% in May. This is the biggest monthly decline on record and these factors don’t bode well for house prices.

Meanwhile, many looking to refinance to a lower rate and to capitalise on the generous cash back given by the big four have also been caught out.

3 dangers from accessing your super early

It appears that many Aussies are applying for the early super release even though they don’t really need the cash.

The ATO recently issued warnings that they are coming after those who have abused the program, which allows you to withdraw $10,000 in FY20 and another $10,000 in FY21 tax free.

Early indications are many Aussies have filed for the second tranche since the start of this financial year on July 1.

Now there are three reasons why you should only apply for early super payouts only if you really need it. Taking money out now will leave you significantly poorer when you retire, you can get in trouble with the tax man if you treat this as free money and you can hurt your chances of getting a bank loan.

Foolish takeaway

However, this assumes the banks find out about it. Getting access to super won’t show up on your credit report. So, the only way for lenders to know is if the applicant is required to show bank statements and the super withdrawal shows up.

Another support program with a hidden sting in the tail is the loan holiday scheme offered by lenders.

Borrowers can apply to suspend mortgage repayments till October and the banks are offering a further four-month extension for qualified customers.

But if you are on a repayment freeze, you won’t get refinanced as you are also deemed to be under financial stress.

Lenders are particularly sensitive to living up to their responsible lending obligations these days, thanks to the Banking Royal Commission.

As the adage goes, nothing comes for free.

More reading

• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• The embattled ASX 200 stocks that could deliver a dividend surprise
• 3 large cap ASX shares primed for expansion and M&A activity
• 3 ASX dividend shares to buy in July
• The CBA share price is up 30% since March

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenalu.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week in the red. At the time of writing the benchmark index is down 0.25% to 5,940.4 points.

Four shares that have fallen more than most today are listed below. Here’s why they are dropping lower:

The AVITA Therapeutics Inc (ASX: AVH) share price is down almost 3% to $8.29. This follows the release of the regenerative medicine company’s fourth quarter and full year sales update. For the 12 months, AVITA’s total revenue was approximately US$14.32 million. This was an increase of US$8.78 million or 160% over FY 2019’s sales. It appears as though investors were expecting even stronger growth.

The Chorus Ltd (ASX: CNU) share price has crashed 9% lower to $6.65. Investors have been selling the New Zealand telco’s shares after the release of its fourth quarter update. That update revealed that the lockdown period had a significant impact on its fourth quarter fibre activity and uptake. In addition to this, the New Zealand Commerce Commission has announced a change to the timing for the next step in its input methodologies process. This relates to changes they are considering to their approach to valuing the financial loss asset and associated updates to the draft determination provisions.

The Evolution Mining Ltd (ASX: EVN) share price is down 3% to $6.12. Investors have been selling the gold miner’s shares after it was downgraded by two brokers. Both Goldman Sachs and Citi have downgraded Evolution’s shares to a sell rating largely on valuation grounds.

The New Hope Corporation Limited (ASX: NHC) share price has fallen 1.5% to $1.38. This is despite the coal miner announcing the appointment of its new chief executive officer this morning. New Hope has appointed former Yancoal Australia Ltd (ASX: YAL) CEO, Reinhold Schmidt, to the role. Mr Schmidt left the rival coal miner in March of this year.

More reading

• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• AVITA Therapeutics share price on watch after Q4 update
• 5 things to watch on the ASX 200 on Friday
• Why Afterpay, Evolution, Netwealth, & Praemium shares are racing higher
• Gold jumps to 9-year high with record highs in sight

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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